Ivanhoe Mines
DRC — Ivanhoe Mines, the TSX-listed base metals company, has announced positive findings of an independent PFS for phase one of development at its Kamoa copper project.

The Kamoa copper project — a joint venture between Ivanhoe Mines and Zijin Mining Group Co. has been independently ranked as the world’s largest, undeveloped, high-grade copper discovery by international mining consultant Wood Mackenzie.

The report reflects the initial phase of project development and describes the construction and operation of a 3 Mtpa underground mine, concentrator processing facility and associated infrastructure.

The first phase of mining would target high-grade copper mineralisation from shallow, underground resources to yield a high-value concentrate. The planned second phase would entail a major expansion of the mine and mill, and construction of a smelter to produce blister copper.

Highlights of the Ivanhoe Kamoa 2016 PFS

Annual mine production of 3 Mtpa at an average grade of 3.86% copper over a 24 year mine life, resulting in annual copper production of approximately 100 000 t.

  • Initial capital cost, including contingency, is US$1.2 billion, approximately $200 million lower than estimated in the Kamoa 2013 PEA.
  • Life-of-mine average mine-site cash cost is $0.75/lb of copper.
  • After-tax net present value (NPV) at an 8% discount rate of $986 million.
  • After-tax internal rate of return (IRR) of 17.2% and a payback period of 4.6 years.
  • High-grade copper concentrate with an average grade of 39.2% copper and very low arsenic levels.
  • Improvements to the mining method have the potential to reduce average mine site cash cost during the first phase to $0.61/lb of copper, and improve the after-tax NPV at an 8% discount rate to $1.182 billion, the IRR to 18.9% and the payback period to 4.3 years.

“The results of this independent pre-feasibility study confirm the robustness of the Kamoa copper project over a wide range of copper prices, with the potential for significant improvement in the results as we move forward on the feasibility study,” says CEO Robert Friedland.

[quote]“We know of no other copper project in the world that offers the potential of multi-decade, large-scale, mechanised production from a near surface, stratiform deposit grading nearly 4% copper, with the demonstrated potential for further high-grade discoveries nearby, and located close to a major mining centre.

The Kamoa 2016 PFS has identified several areas for further evaluation to optimise the project’s economics, including:

  • The use of controlled convergence room-and-pillar mining, which has been successfully used by KGHM Polska Miedź S.A. (KGHM) at its copper-mining operations in Poland for the past 20 years.
  • Based on detailed analysis by KGHM Cuprum R&D Centre, this mining method appears to be well suited to the Kamoa deposit and, if implemented, potentially could provide significant cost savings as there would be no requirement for cemented backfill and ore extraction ratios would increase.
  • Increased production up to 4 Mtpa from the proposed initial mining area, with only limited adjustments to the ore-handling and ventilation systems, thereby resulting in a more efficient use of capital.

Kamoa 2016 PFS results

The life-of-mine production scenario schedules 71.9 Mt at an average grade of 3.86% copper over 24 years, producing 6.1 Mt of copper concentrate, containing approximately 5.3 Blb of copper.

The economic analysis used a long-term price assumption of $3.00/lb of copper and returns an after-tax NPV at an 8% discount rate of $986 million. It has an after-tax IRR of 17.2% and a payback period of 4.6 years.

The initial capital cost, including contingency, is $1.2 billion. The initial capital cost includes a $104 million advance payment to the DRC state-owned electricity company, SNEL, to upgrade two hydro power plants (Koni and Mwadingusha) to provide Kamoa with access to clean electricity during the initial phase of operations.

The upgrading work is being led by Stucky, of Switzerland, and the advance payment is expected to be recovered through a reduction in the power tariff once Kamoa is in operation. The life-of-mine average mine site cash cost is $0.75/lb of copper.

The Kamoa 2016 PFS was independently prepared by OreWin, Amec Foster Wheeler E&C Services and SRK Consulting.